IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `B', NEW DELHI
Before Sh. I. C. Sudhir, JM And Sh. J. S. Reddy, AM
ITA No. 4322/Del/2011 : Asstt. Year : 2006-07
M/s Crown Advertising & Marketing Vs Income Tax Officer, Ward-3(4)
(P) Ltd., B-22, Maharani Bagh, New Delhi
New Delhi
(APPELLANT) (RESPONDENT)
PAN No. AAACC4193K
Assessee by : Smt. Indra Bansal, CA
Revenue by : Smt. Parwinder Kaur, Sr. DR
Date of Hearing : 30.7.2014 Date of Pronouncement : 24.9.2014
ORDER
Per J. S Reddy, AM:
This is an appeal filed by the assessee directed against the order of
the CIT(A) dated 5.7.2011 for the assessment year 2006-07.
2. The assessee is a company. It filed its return of income for the
assessment year 2006-07 on 17.11.2006 declaring income of Rs.
24,290/-. Admittedly, the assessee has not computed income u/s 115JB
of the Act, though it was liable to pay tax on book profits. The Assessing
Officer computed Book profit u/s 115JB and levied tax. As the assessee
company has not disclosed its liability u/s 115JB of the Act in its return
of income, penalty u/s 271(1)(c) was levied. At para 9, the Assessing
2 ITA No. 4322/Del/2011
Crown Advertising & Marketing (P) Ltd.
Officer rejected the submissions filed by the assessee that the mistake
was bonafide, inadvertent etc.
3. On appeal, the First Appellate Authority confirmed the order
levying penalty by observing as follows:
"3.2 Now adverting to the present case of the appellant it is
seen that the appellant has not computed its book profit as
required mandatorily u/s 115JB of the I. T Act. The appellant
has also failed to even get a report from accountant as required
u/s 115JB(4) of the Act. The ld. AR has submitted that this was
done due to the ignorance of law. This contention of the
appellant has not acceptable. It is seen that the books of
accounts of the appellant has been audited by a qualified CA.
Who are supposed to be expert in tax? Therefore, it cannot be
said that the appellant company was not having assistance of
the professionals. Although the books of accounts were audited
the case of the appellant company, it is difficult to believe that
the appellant company could not have got a report from an
accountant as required u/s 115JB. From the facts of the case it
appears that the book profit was not computed deliberately to
avoid MAT on the capital gains. During the course of
assessment, this facts was detected by the A.O. while computing
the profit vis-à-vis normal profit of the appellant company. It
was noticed by the A.O that the appellant has not filed its
computation of book profit. When it has pointed out to the
appellant company by the A.O the appellant merely agreed to
pay tax on the MAT profit and subsequently paid the tax after
completion of assessment. It is also difficult to believe that the
CA would not have advised to the appellant company about the
mandatory nature of section 115JB. If the MAT computation
would have been computed u/s 115JB(2) i.e. as per Part II and
Part III of Schedule VI to the Companies Act, then the inclusion
3 ITA No. 4322/Del/2011
Crown Advertising & Marketing (P) Ltd.
of capital gains for the purposes of book profit would have been
imminent. With the intention of avoiding the inclusion of
capital gains for the purposes of book profit, the appellant
company has not computed the book profit. As per section
115JB as per Clause 2(b) of Part II of Schedule VI to the
Companies Act, capital gains to the included for the purposes
of the computation of book profit."
4. Aggrieved assessee is an appeal before us. The ld. Counsel for the
assessee Smt. Indra Bansal submitted that the assessee had committed an
inadvertent mistake while filing its return of income and due to this
mistake did not offer to tax capital gains u/s 115JB or paid tax on the
same. She relied on the decision of the Hon'ble Supreme Court in the
case of Dilip N. Shroff Vs CIT 161 Taxman 221. She also relied on the
decision of Hon'ble Supreme Court in the case of CIT Vs Reliance Petro
Products 322 ITR 158 (SC) and in the case of Pricewaterhouse Coopers
Pvt. Ltd Vs CIT 348 ITR 306 (SC).
5. The ld. Departmental Representative Smt. Parwinder Kaur relied
on the orders of the authorities below and submitted that this omission is
not an inadvertent mistake and the explanation given by the assessee is
not bonafide. She further relied on the decision by the Jurisdictional
High Court in the case of CIT Vs Zoom Communication (P) Ltd. 327
ITR 510 (Del) and argued that the proposition laid down in that case are
applicable to the facts of this case.
4 ITA No. 4322/Del/2011
Crown Advertising & Marketing (P) Ltd.
6. Rival contentions heard. On a careful consideration of all the facts
and circumstances of the case we hold as follows. The contentions of the
assessee before the ld. CIT(A), which is contained in the letter dated
14.10.2010 is as follows:
"Thus, the action of the assessee in not filing of the return of the (Sic)
MAT was due to negligence and ignorance rather than any intention to
conceal or under state of his (Sic) income."
7. Admittedly, the assessee has not taken into account the mandatory
requirements of sec. 115JB while filing its return of income nor did it
pay tax thereon. In our considered view the explanation given by the
assessee that it was an inadvertent mistake cannot be accepted. The
explanation is not bonafide. In fact, the assessee admits that this lapse
occurred due to negligence. Thus, in our view the propositions laid down
by the Hon'ble Supreme Court in the case of Reliance Petro Products
(supra) or in the case of Pricewaterhouse Coopers Pvt. Ltd (supra) are
not applicable to the facts of this case. Similarly, the other case relied
upon by the ld. Counsel of the assessee is factually distinguishable. This
is a clear case of furnishing inaccurate particulars of income. Thus, in
our view the First Appellate Authority has rightly confirmed the penalty
levied by the Assessing Officer u/s 271(1)(c). While coming to this
decision, we draw strength from the judgment of the Hon'ble Delhi High
Court in the case of Zoom Communication (P) Ltd. (supra)
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Crown Advertising & Marketing (P) Ltd.
8. In the result, the appeal of the assessee is dismissed.
Order pronounced in the open Court on 24/9/2014.
Sd/- Sd/-
(I. C. Sudhir) (J. S. Reddy)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 24/9/2014
*Subodh*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5.DR: ITAT
ASSISTANT REGISTRAR
Date
Initial
1. Draft dictated on 19.09.2014 PS
2. Draft placed before author 22.09.2014 PS
3. Draft proposed & placed before the second JM/AM
member
4. Draft discussed/approved by Second Member. JM/AM
5. Approved Draft comes to the Sr.PS/PS PS/PS
6. Kept for pronouncement on PS
7. File sent to the Bench Clerk PS
8. Date on which file goes to the AR
9. Date on which file goes to the Head Clerk.
10. Date of dispatch of Order.